A recent equipment appraisal asignment emphasized again the importance of using one shared appraiser for both parties in a marital dissolution – also known as a divorce.
Just last week, a scheduled inspection for a manufacturing equipment appraisal had to be cancelled until further notice. A party in the divorce proceedings had taken a good look at the equipment asset list and noticed that none of the office furnishings, fixtures and equipment were included. In a ma-and-pop office with second hand furnishings and a simple telephone/computer set up, you might not be too concerned. In this case, however, headquarters in the central coast of California managed 9 different locations throughout three states and included state-of-the-art electronics, distinctive ergonomic furnishings, and numerous customized storage and filing systems. Not something you want to ignore when calculating values for the equitable distribution of assets.
Inspection of the assets – and the forthcoming valuation report – is now on hold, pending agreement on what constitutes a complete asset list.
What does this mean for the folks involved? Another delay in divorce proceedings that have already dragged on for over 2 years, an annoyed judge, more legal expenses, and another opportunity for disagreements and frustration.
It could have been worse. In this case, the equipment appraisal was part of a business valuation (BV) and I was, in fact, the only equipment appraiser involved. I’d worked with both BV experts previously and they had agreed to use my machinery and equipment valuation report in both of their business value calculations. In this case the business value really comes down to what the equipment appraisal report says. Can you imagine the turmoil that would have resulted if the BV experts had hired their own equipment appraiser and only discovered the disconnect in asset lists after the equipment appraisals had been incorporated in the business valuation reports and submitted to the judge?
Here’s the take-away: the earlier in the process that both parties in the divorce can use a shared expert for machinery and equipment valuation, the more efficient and less costly the process of the marital dissolution will be. This is true whether the equipment being disputed is manufacturing equipment, construction equipment, agricultural equipment, transportation fleets, food processing equipment or a line of grocery stores!
Jack Young, ASA, CPA
Equipment Appraisal Expert for Divorce
NorCal Valuation Inc.
